Let’s fix EI. EI payments are the workers’ money, so put it in individual locked savings accounts, and let workers draw on it if unemployed, withdrawing the rest when they retire.
By Fred Morris
In early 2015, I was unable to work for five weeks due to a hernia. I was totally denied employment insurance because I had just received my first Canada Pension Plan cheque. I had paid EI for 32 years without obtaining a benefit. My monthly income at that point declined by 74 per cent. I decided to research the history of EI.
After the First World War, the population of urban centres surpassed the rural population. This led to increased problems in the urban workplace. Politicians from across the political spectrum began to make a case for unemployment insurance in order to provide Canadians with bridge income during employment interruptions. The idea was included in the 1919 Liberal policy convention, the 1933 CCF Regina Manifesto and the 1935 Bennett New Deal. In the late 1930s, the provinces unanimously agreed to let the federal government assume this responsibility. In the 1940 federal election campaign, Paul Martin Sr. strongly advocated adoption of unemployment insurance.
It is important to point out that EI revenues are collected from employers and employees for every hour worked. Since its inception, the employment rate (unemployment numbers reversed) has been between 87.3 per cent and 97.8 per cent. That should mean there would always be enough people working to sustain the fund, which only pays 55 per cent of the lost income for a short period of time. Working seniors pay but cannot collect because they receive the old age pension and CPP.
Retiring seniors do not get a cent of the thousands of dollars paid into EI during their working years. Some of these seniors have never filed a claim. Most seniors end up paying thousands of dollars in a hidden tax disguised as an insurance policy. Would any campaigning politician want to defend this reality at a meet-and-greet in a seniors residence??
It is totally inaccurate to portray employment insurance claims as a cost to taxpayers. Since 1990 there has been no taxpayer funding. When regional unemployment rates, the availability of other jobs and quitting a job are used as excuses for denying EI, the federal government is denying people access to their own money. In the 1995 federal budget, then finance minister Paul Martin made EI much harder to claim. The 1995 budget speech states, “a key job for unemployment insurance must be to help Canadians stay off unemployment insurance.”
The obvious difference between the principles of Paul Martin Sr. and the actions of Paul Martin Jr. indicates that the implementation of the plan has taken a wrong turn. In 2008, the huge EI surplus was diverted into general revenues. The total transfer was $57,859,571,696 (almost $58 billion), accumulated in the insurance account over the previous two decades. The government’s budget deficit was reduced by the misuse of the employees’ and their employers’ EI contributions.
After raiding the fund, the Harper government passed legislation outlawing future misuse of EI Funds. If the present trend of denying benefits to most of the employees who pay them continues, what will happen to future surpluses?
The federal government could eliminate future skepticism by crediting an employee’s EI payments to a Forced Savings Account under federal administration. After allowing 20 per cent for administration, every employee would be able to recover the other 80 per cent during employment interruptions and at retirement. The possibility of diverting funds into government revenue would be eliminated. Other revenue sources would have to be used to finance all other government activities.
EI would revert to its original purpose of helping working Canadians. If a person in his 50s becomes unemployed after 40 continuous working years, they could collect 80 per cent of their lifetime EI contributions. There is less of a possibility of this person being cut off before he finds a new job. Many retiring Canadians would receive a sizable return from their EI contributions.
No safety net program is perfect. However, these changes would help millions of Canadians and restore the original intent of EI. If the federal government is not interested in making major changes to EI, it should change the name from employment insurance to the employment tax.
Fred Morris is a grandfather who has worked for 50 years in the restaurant and delivery business. He continues to work and pay EI that he has no hope of collecting He is a political activist with a university degree in economics.